Net debt increased to EUR 798 million at the end of the year – after a capital increase of over CHF 325 million in January 2020, net debt fell significantly

Outlook 2020: Despite a persistently challenging market environment, SCHMOLZ + BICKENBACH expects a significantly improved adjusted EBITDA compared to 2019, driven by the initiated restructuring program and an improved inventory situation in the end markets. The effects of the coronavirus on this forecast, which cannot yet be estimated, have not been taken into account.

CEO Clemens Iller commented: “Business development in 2019 was determined by an unusually strong and prolonged decline in demand, both in terms of its extent and duration. We were not able to fully offset the impact of the pronounced market weakness on earnings with internal measures, which meant that we did not achieve the targets we had set ourselves at the beginning of the financial year. With the refinancing of the company, which will be completed in the first quarter of 2020, we are creating the prerequisites for securing the continued existence of SCHMOLZ + BICKENBACH beyond the crisis. Building on a strengthened financial basis and supported by a stable shareholder base, we will resolutely implement the restructuring measures identified in the transformation plan in order to advance the turnaround of the company in the coming years. We expect little economic tailwind in 2020, also due to the consequences of coronavirus for the global economy, but nevertheless expect the market environment to stabilize and earnings to improve accordingly compared to 2019.”

Financial key figures

SCHMOLZ + BICKENBACH Group

Unit

2019

20181)

Δ (%)

Q4 2019

Q4 2018

Δ (%)

Sales volume

kilotons

1,830

2,093

– 12.6

388

498

– 22.1

Revenue

million EUR

2,980.8

3,312.7

– 10.0

619.0

795.5

– 22.2

Average sales price

EUR/t

1,628.9

1,582.8

2.9

1,595.4

1,597.4

– 0.1

Adjusted EBITDA

million EUR

51.2

236.7

– 78.4

1.4

39.2

– 96.4

EBITDA

million EUR

– 12.5

251.4

–

– 15.1

28.0

–

Adjusted EBITDA margin

%

1.7

7.1

–

0.2

5.0

–

EBITDA margin

%

– 0.4

7.6

–

– 2.4

3.5

–

EBIT

million EUR

– 425.4

34.7

–

– 52.7

– 108.0

– 51.2

Earnings before taxes

million EUR

– 482.9

– 8.7

–

– 72.2

– 122.4

– 41.0

Group result

million EUR

– 521.0

– 0.7

–

– 75.9

– 93.1

18.5

Investments

million EUR

138.4

139.6

– 0.9

56.0

72.0

– 22.2

Free cash flow

million EUR

– 7.1

– 159.8

95.6

– 48.6

13.6

–

Unit

31.12.2019

31.12.2018

Δ (%)

30.9.2019

Net debt

million EUR

797.6

654.8

21.8

723.5

Shareholders, equity

million EUR

183.8

707.7

– 74.0

223.8

Gearing

%

433.9

92.5

–

323.3

Leverage

x

15.6

2.8

–

8.2

Balance sheet total

million EUR

1,919.1

2,531.8

– 24.2

2,013.6

Equity ratio

%

9.6

28.0

–

11.1

Capital employed

million EUR

10,318

10,486

– 1.6

10,451

Employees at closing date

positions

1,384.1

1,739.5

– 20.4

1,460.8

Unit

2019

20181)

Δ (%)

Q4 2019

Q4 2018

Δ (%)

Earnings/share2)

EUR/CHF

–0.55/–0.61

0.00/0.00

–

–0.08/–0.09

–0.10/–0.12

–

Shareholders’ equity/share3)

EUR/CHF

0.19/0.21

0.75/0.85

–

0.19/0.21

0.75/0.85

–

Share price high/low

CHF

0.617/0.192

0.886/0.495

–

0.294/0.205

0.783/0.495

–

1) Including Ascometal, fully consolidated since February 1, 2018

2) Earnings per share are based on the group result after deduction of the portions attributable to non-controlling interests

3) As at December 31, 2019 and December 31, 2018, respectivel

Lucerne, March 11, 2020– SCHMOLZ + BICKENBACH, a global leader in special long steel, today reported 12.6% lower sales volume of 1,830 kilotons for the 2019 financial year compared to 2,093 kilotons in 2018. The decline in turnover was lower in percentage terms and fell by 10.0% to EUR 2,980.8 million. Adjusted EBITDA reached EUR 51.2 million after EUR 236.7 million in the previous year. At EUR –7.1 million, free cash flow was negative (2018: EUR –159.8 million), but improved year-on-year as net working capital was reduced by around EUR 160 million to EUR 773.1 million since the end of 2018, mainly due to disproportionate inventory reductions

Business development in the fourth quarter of 2019

In the fourth quarter of 2019, the tense market situation continued to have a significant impact on the financial figures. Due to weak demand, sales volumes and thus revenue fell significantly year-on-year. Adjusted EBITDA and net profit decreased accordingly. Net debt increased both compared with the end of 2018 and the end of the third quarter of 2019.

In the fourth quarter of 2019, 388 kilotons of steel were sold, 22.1% less than in the same quarter of the previous year (Q4 2018: 498 kilotons). This decline was mainly due to 26.5% lower sales volumes of quality & engineering steel. The crisis in the automotive industry and flattening demand from the mechanical and plant engineering industry had a marked impact on this product group. Sales of tool steel and stainless steel were also significantly lower than in the same quarter of the previous year, declining by 8.6% and 7.7% respectively.

The average sales price per ton of steel in the fourth quarter of 2019 was with EUR 1,595, slightly below the average price achieved in the same quarter of the previous year (Q4 2018: EUR 1,597). The decline is due to increased price pressure resulting from low demand and lower raw material prices. The change in the sales distribution in favor of stainless grades largely compensated for the decline.

Revenue decreased by 22.2% to EUR 619.0 million compared to the same quarter of the previous year. The decline was primarily due to significantly lower volumes in the quality & engineering product group. Revenue of stainless steel fell by 8.7% and tool steel by 7.0%. From a regional perspective, revenue declined in all regions compared with the prior-year quarter.

At EUR 1.4 million, adjusted EBITDA in the fourth quarter of 2019 (Q4 2018: EUR 39.2 million) was significantly lower than in the same quarter of the previous year. The one-time effects included in the adjustments amounted to EUR 16.5 million and comprised inventory write-downs in various Business Units. Taking these effects into account EBITDA declined to EUR –15.1 million (Q4 2018: EUR 28.0 million). The adjusted EBITDA margin declined to 0.2% (Q4 2018: 5.0%) and the EBITDA margin to –2.4% (Q4 2018: 3.5%). At EUR –19.4 million (Q4 2018: EUR –14.3 million), the financial result for the fourth quarter was down year on year.

As a result of the unfavorable business development, earnings before taxes (EBT) in the fourth quarter were EUR –72.2 million (Q4 2018: EUR –122.4 million). Tax expenses amounted to EUR –3.7 million, resulting in a consolidated loss of EUR –75.9 million (Q4 2018: EUR –93.1 million).

Free cash flow of EUR –48.6m was significantly lower than in Q4 2018 (EUR 13.6 million) despite the reduction of inventories in Q4 2018, mainly due to lower EBITDA.

Business development in fiscal year 2019

The year 2019 was significantly influenced by the weak demand situation and the impairment of assets of individual Group companies. Significantly lower sales volumes led to lower revenue, significantly lower profitability and higher debt.

In the 2019 financial year, the net assets of DEW, Ascometal, Finkl Steel and Steeltec had to be written down by EUR 312.7 million. In the consolidated income statement this is included in the item depreciation, amortization and impairment losses. An additional value adjustment in connection with the assets was made on the deferred tax assets in the amount of EUR 46.2 million, which is included in tax expenses.

At 1,830 kilotons, 12.6% less steel was sold in 2019 than in the previous year (2018: 2,093 kilotons). The reason for this is the general weakness in demand and the resulting decline in sales volumes in all three product groups, i.e. quality & engineering steel, stainless steel and tool steel.

The average sales price per ton of steel sold was with EUR 1,629 higher than the previous year's EUR 1,583. The increase is mainly due to the more favorable product mix with a larger share of higher-priced steel grades in the stainless steel product group. Nevertheless, due to subdued sales volumes, revenue declined by 10.0% to EUR 2,980.8 million compared to the previous year, which was mainly due to the 17.5% reduction in quality & engineering steel. The decline in stainless steel was 2.6% and in tool steel 3.5%. In geographical terms, declining revenue were recorded in almost all markets.

EBITDA adjusted for one-time effects decreased by 78.4% to EUR 51.2 million. The one-time effects amounted to EUR 63.7 million and included restructuring provisions of EUR 15.3 million for planned personnel measures in the Business Units Ascometal and DEW as well as the antitrust fines of EUR 12.3 million. EBITDA amounted to EUR –12.5 million and was significantly lower than in the previous year at EUR 251.4 million. The adjusted EBITDA margin was thus 1.7% (2018: 7.1%) and the EBITDA margin –0.4% (2018: 7.6%).

At EUR –57.5m, the financial result was more negative than in the previous year (EUR –43.4m) due to the higher level of debt. As a result of the unfavorable business development, earnings before taxes (EBT) amounted to EUR –482.9 million. Tax expenses include a devaluation of deferred tax assets in the amount of EUR 46.2 million in connection with the impairment of assets. The consolidated loss for the full year 2019 was EUR –521.0 million and therewith significantly higher than in the previous year (2018: EUR –0.7 million).

At EUR 797.6m, net debt, which comprises current and non-current financial liabilities less cash and cash equivalents, was higher than on December 31, 2018 (EUR 654.8 million). Accordingly, the ratio of net debt to adjusted EBITDA increased from 2.8x to 15.6x compared to December 31, 2018.

Outlook for the 2020 financial year

Following the successful capital increase at the beginning of the year, SCHMOLZ + BICKENBACH will continue to push ahead with the restructuring of the Group. The aim is to lead the Group to lasting profitability and, at the same time, to create corporate value. This is to be achieved on the one hand by the consistent continuation of measures already introduced, and on the other hand by additional structural adjustments within the framework of a transformation plan. This transformation plan details the path to sustainable competitive profitability. Among the existing measures, the industrial integration of Ascometal and the related efficiency improvement measures, the turnaround of Finkl Steel in North America, the restructuring of Steeltec in Germany, but also personnel measures and operational improvements at DEW and the investment results at Swiss Steel are on the agenda.

Despite a persistently challenging market environment, SCHMOLZ + BICKENBACH expects adjusted EBITDA for 2020 to be substantially improved compared to 2019, driven by the initiated restructuring program and an improved inventory situation in the end markets.

Possible effects of the coronavirus on the end markets and on SCHMOLZ + BICKENBACH cannot yet be assessed. Accordingly, the outlook of SCHMOLZ + BICKENBACH for the results of the 2020 financial year does not take into account any consequences of the coronavirus.

– END–

For further information:

Dr Ulrich Steiner

Vice President Corporate Communications, Investor Relations & CSR

Telephone +41 (0)41 581 4120

u.steiner@schmolz-bickenbach.com

About SCHMOLZ + BICKENBACH

The SCHMOLZ + BICKENBACH Group is today one of the world's leading providers of individual solutions in the special long steel products sector. The Group is one of the leading manufacturers of tool steel and non-corrosive long steel on the global market and one of the two largest companies in Europe for alloyed and high-alloyed quality and engineering steels. With more than 10,000 employees and its own production and distribution companies in 30 countries on 5 continents, the company guarantees global support and supply for its customers and offers them a complete portfolio of production and sales & services around the world. Customers benefit from the company's technological expertise, consistently high product quality around the world as well as detailed knowledge of local markets.

Forward-looking statements

This press release contains forward-looking statements about developments, plans, intentions, assumptions, expectations, convictions, possible impacts or the description of future events, outlooks, revenues, results or situations, for example. These are based upon the company's current expectations, convictions and assumptions, but could materially differ from any future results, performance or achievements. We are providing this communication as of the date hereof and do not undertake to update any forward-looking statements contained herein as a result of new information, future events or otherwise.